CellaVision AB (publ) (STO:CEVI) Analysts Are More Bearish Than They Used To Be

Market forces rained on the parade of CellaVision AB (publ) (STO:CEVI) shareholders today, when the analysts downgraded their forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After this downgrade, CellaVision's four analysts are now forecasting revenues of kr687m in 2023. This would be a satisfactory 7.5% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 20% to kr5.97. Prior to this update, the analysts had been forecasting revenues of kr789m and earnings per share (EPS) of kr6.69 in 2023. Indeed, we can see that the analysts are a lot more bearish about CellaVision's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for CellaVision

Despite the cuts to forecast earnings, there was no real change to the kr250 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on CellaVision, with the most bullish analyst valuing it at kr280 and the most bearish at kr215 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that CellaVision's revenue growth is expected to slow, with the forecast 6.0% annualised growth rate until the end of 2023 being well below the historical 15% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 15% per year. Factoring in the forecast slowdown in growth, it seems obvious that CellaVision is also expected to grow slower than other industry participants.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for CellaVision. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that CellaVision's revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on CellaVision after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for CellaVision going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.